Disclosure of Defects in Hawaii

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Posted: January 9, 2009

This blog will discuss (i) whether the seller of a home has a duty to disclose material facts regarding the property to a buyer and (ii) whether the realtor and/or seller of a home has a duty to disclose material facts regarding the property to a buyer. The short answer is that a seller has an absolute duty to disclose material facts to the buyer. Although this obligation is usually handled by the seller in the disclosure statement, the legal obligation arises from the common law and a variety of statutes.

For example, pursuant to HRS section 508, a seller (or an agent of a seller, ie. real estate agent) may be found liable for failure to disclose defects in property sold. HRS section 508D-1 requires “disclosure by seller (and extended to realtor) of “material facts” relating to property that are (1) within the knowledge or control of the seller, or (2) can be observed from a visible, accessible area, or are required under section 508D-15.” Material fact is defined as “any fact, defect, or condition, past or present, that would be expected to measurably affect the value to a reasonable person of the residential property being offered for sale.”
However, there are several defenses available to the seller. Accordingly, HRS section 508D-13 provides that:

Information in a disclosure statement that has not been disclosed or becomes inaccurate regarding a material fact as a result of an act, agreement, or occurrence (or otherwise becomes known to seller) after the statement is provided to the buyer does not violate this chapter.

Therefore, if the material defects arise after the buyer purchased the home, then there is no valid claim against the seller.

There must be evidence that the seller had prior knowledge of the defect. According to HRS section 508D-1, “the material fact that is required to be disclosed must be within the knowledge of the seller or visible to the seller.”

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